Irish Farmers Monthly

A game-changing CAP

on 12 January 2018.

The proposals for restructuring the next Common Agricultural Policy and how it interacts with farmers are game-changing, as EU Commissioner for Agriculture and Rural Development, Phil Hogan, explained to Matt O’Keeffe.

The Commissioner began by outlining how he intends changing the balance in the next Common Agricultural Policy (CAP): “We are trying to reflect the fact that farmers and everyone else involved are finding the CAP rules very complex and difficult. Small errors in applications can sometimes mean 100 per cent loss of a farmer’s payment, essentially their entire income for the year. Our ambition is to change the culture into one of helping people to work their way through some of this bureaucracy, rather than trying to catch them out. So the delivery model of the CAP will have to change in the future to reflect this policy. There should be preventative preliminary checks before the application is lodged in the system, or a ‘yellow card’ system to prevent a farmer being fully penalised on a first error. These are options to minimise the impact on farmers of genuine errors. We will try to reduce the complexity and number of definitions and regulations that cause confusion. Essentially, we are moving from a compliance-based, rules-driven approach to a performance and results based system. The Department of Agriculture, Food and the Marine in Ireland will have more of a say, together with the farm organisations, in terms of the policies to be put in place in order to meet the European Union’s objectives.”

A supply and demand-driven dairy industryCommissioner Hogan was emphatic in calling for all concerned in the dairy sector to adopt measures which would take full cognisance of market forces. It was put to him that this would be extremely difficult for Ireland, given the momentum for growth in the sector. “We have to be conscious of supply and demand trends and everyone involved must act in accordance with those market forces,” he said. “There must be support for the concept of a smart, sustainable, market-orientated food sector. The EU cannot be considered as just another outlet for dairy products. It is the job of the sector to identify and sell into strong and sustainable commercial markets. We have two priorities in relation to our stocks of skimmed milk powder. They need to be released onto the market in a realistic and prudent manner and we must prevent, as far as possible, any further build-up of intervention stocks next year. All of this involves managing the market in the best interests of everyone, including the producer.”

Market developmentThis was a theme that Commissioner Hogan had prioritised in his address to the Food Wise conference in Croke Park: “Without the opening-up of new markets in China and the far east, we would have a significant oversupply in Europe. It is difficult to know what the price for farmers’ produce would have been had it not been for the opening of these high-value export markets. We can build on these relationships with China and Japan and other far-eastern countries, as well as Canada and Mexico. We do have difficulties in relation to trade negotiations with Mercosur, for instance. A balanced outcome is in all of our interests.”

Environmental issuesCommissioner Hogan was forthright in his comments on facing up to environmental issues: “We have no choice about this. The reality is that we are facing serious problems down the road if we don’t reflect on the fact that Ireland’s food and agri sectors will have to be coordinated with all other EU policies. Otherwise, we are going to end up paying a lot of money in fines, and that is not what anyone wants. Nobody should be under any illusion that protection of our natural resources, doing more on nutrient management and meeting our international obligations on climate change are going to take a lot of education and training for everyone involved. It will require a strong advisory service to help farmers bring these policy objectives to reality while, at the same time, ensuring farmers are able to make a living. Better nutrient management and the increased use of precision-farming technologies can make a difference. The CAP will incentivise farmers in the future to move in this direction.”

Target-driven CAPOutlining his plans for a target-driven CAP, Commissioner Hogan said: “Clear and measurable targets will be built into national CAP plans, and failure to meet those targets will result in the imposition of penalties. Food Wise 2025 correctly recognises that a significant increase in food production cannot be considered in isolation to the environmental impact, particularly in relation to the depletion of our national resources. The Environmental Protection Agency (EPA) has warned that Ireland needs to adopt a greater sense of urgency in reducing its dependence on fossil fuels. Failure to tackle this issue could cost the country large sums of money in relation to carbon credits by 2020. We are sleepwalking towards further EU fines under the renewable energy directive by our lack of investment in the grid.”

A cautionary Dutch taleThe Commissioner outlined the situation in the Dutch dairy industry as a cautionary tale: “For the past year, the Dutch have been dealing with a phosphorus problem, which has resulted in the slaughter of 50,000 cows to meet their targets. We do not want the Irish to be in such a situation in the future. So we have to plan properly to avoid such scenarios developing. The Dutch are currently negotiating a nitrates derogation under the Nitrates Directive. That derogation is worth over € 1bn to the Dutch dairy industry. In recent weeks, it has been revealed that controls need to be tightened, which is placing great strains on the Dutch government and its dairy sector. So, Ireland has to wake difficulties in relation to trade negotiations with Mercosur, for instance. A balanced outcome is in all of our interests.”

Environmental issuesCommissioner Hogan was forthright in his comments on facing up to environmental issues: “We have no choice about this. The reality is that we are facing serious problems down the road if we don’t reflect on the fact that Ireland’s food and agri sectors will have to be coordinated with all other EU policies. Otherwise, we are going to end up paying a lot of money in fines, and that is not what anyone wants. Nobody should be under any illusion that protection of our natural resources, doing more on nutrient management and meeting our international obligations on climate change are going to take a lot of education and training for everyone involved. It will require a strong advisory service to help farmers bring these policy objectives to reality while, at the same time, ensuring farmers are able to make a living. Better nutrient management and the increased use of precision farming technologies can make a difference. The CAP will incentivise farmers in the future to move in this direction.”

Target-driven CAPOutlining his plans for a target-driven CAP, Commissioner Hogan said: “Clear and measurable targets will be built into national CAP plans, and failure to meet those targets will result in the imposition of penalties. Food Wise 2025 correctly recognises that a significant increase in food production cannot be considered in isolation to the environmental impact, particularly in relation to the depletion of our national resources. The Environmental Protection Agency (EPA) has warned that Ireland needs to adopt a greater sense of urgency in reducing its dependence on fossil fuels. Failure to tackle this issue could cost the country large sums of money in relation to carbon credits by 2020. We are sleepwalking towards further EU fines under the renewable energy directive by our lack of investment in the grid.”

A cautionary Dutch taleThe Commissioner outlined the situation in the Dutch dairy industry as a cautionary tale: “For the past year, the Dutch have been dealing with a phosphorus problem, which has resulted in the slaughter of 50,000 cows to meet their targets. We do not want the Irish to be in such a situation in the future. So we have to plan properly to avoid such scenarios developing. The Dutch are currently negotiating a nitrates derogation under the Nitrates Directive. That derogation is worth over € 1bn to the Dutch dairy industry. In recent weeks, it has been revealed that controls need to be tightened, which is placing great strains on the Dutch government and its dairy sector. So, Ireland has to wake up, and soon, to the reality that we are part of an EU that has assumed the role of global leader in addressing climate challenges.”

Reboot forestry programmeOn the issue of carbon sequestration, Commissioner Hogan insisted that Ireland needs to reboot its afforestation policy and make real headway: “At a minimum, there needs to be a full achievement of the targets on afforestation set out in the 2014 Forestry Programme. The perceived stigma among some farmers towards planting trees on their land needs to be addressed.” He confirmed that sustainable afforestation and food security are priorities for Ireland, as well as all other countries in the EU.

Squaring circlesThere will be huge challenges for Commissioner Hogan in developing the next CAP. Money will be scarcer with the impending withdrawal of Britain from the EU. He may have to consider placing ceilings on farm payments and prioritising payments to those exclusively engaged in farming activities. The Commissioner will have to tread a fine line between giving more responsibility to national governments while retaining the concept of commonality across the EU. The task of marrying food production and environmental pressures will mean that farmers will have to change their focus significantly. All of Commissioner Hogan’s political prowess will be required to create a more farmer-friendly CAP, post-2020.